The power of the placebo has been consistently proven in medicine. Magician Eric Mead extends that idea to magic, pulling off a gruesome trick that's so convincing, you'll cringe.

About Eric Mead

Eric Mead is a magician, mentalist and comedian. He's the author of Tangled Web, a collection of magic and mentalism taken from his personal repertoire.

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GUY RAZ, HOST:

It's the TED Radio Hour from NPR. I'm Guy Raz. On our show today, ideas about why we lie, why we cheat, why we deceive and why we still seem to believe so much of what we're told.

DAN ARIELY: Hello, hello. I'm sorry I'm late.

RAZ: This is Dan Ariely.

ARIELY: I'm the James B. Duke Professor of psychology and behavioral economics at Duke. And what else...

RAZ: And Dan studies cheating. And when and why we do it. A few years ago Dan was on a business trip.

ARIELY: Actually a consulting conference. And I meet John Perry Barlow.

RAZ: It turns out that John Perry Barlow used to be a lyricist for the Grateful Dead.

(SOUNDBITE OF SONG, "TRUCKIN'")

JOHN PERRY BARLOW: (Singing) Truckin'. Got my chips cashed in.

ARIELY: I love the Grateful Dead and I was very impressed with him.

RAZ: Yeah. Great guy to meet at a conference.

ARIELY: It was just delightful to meet somebody like him.

RAZ: So they started talking.

ARIELY: And talking for a while it turns out that he was also a consultant for Enron.

RAZ: Grateful Dead to Enron.

(SOUNDBITE OF NEWS BROADCAST)

UNIDENTIFIED WOMAN: It is one of the most stunning collapses in U.S. corporate history.

RAZ: Enron was of course a giant energy company based in Houston. And for six straight years Fortune magazine named it the most innovative company in America.

(SOUNDBITE OF NEWS BROADCAST)

UNIDENTIFIED WOMAN: It's hard to believe that I company with revenues of some $100 billion last year would be filing for bankruptcy this year.

RAZ: But those $100 billion in revenue - a lie, a fiction. It was totally made up because the company was cheating by making up sales figures and they'd been doing it for years. And most people just assumed it was, you know, a few bad apples at the top. But it turned out that hundreds of people - accountants, managers, consultants - they were all in on the scam as well. And so when Dan Ariely met John Perry Barlow a few years later at that conference he was curious about whether he was involved too.

ARIELY: And I asked him about that. And he basically said he didn't see anything going bad. He believed in the company in an unbelievable way. He said he kind of suspended his own understanding of reality was very happy to buy into a new reality. And then of course the moment Enron collapsed he basically asked himself how could I believe that.

RAZ: Yeah, I mean, how could he have been there and not seen any of that.

ARIELY: And, you know, he's a very smart guy and it's very hard to take somebody you admire and think highly of and basically said, this is a crook. And instead this basically proposed a very different mechanism - if you were getting paid by Enron wouldn't you want to see reality in the way that they were presenting it? And the interesting thing is that if you think that Enron was just kind of three bad people you would say, hey let's just stop hiring bad people or let's find ways to kick them out or - but if you think that it's wishful blindness and all of us are capable of that, that basically requests a very, very different approach.

RAZ: That approach - it opened Dan to the possibility that maybe instead of a few really bad apples there might be a lot of kind of bad apples. Dan picks up the idea from the Ted stage.

(SOUNDBITE OF TED TALK)

ARIELY: So, like we usually do, I decided to do a simple experiment - and here's how it went. If you were in the experiment I would pass you a sheet of paper with 20 simple math problems that everybody could solve but they wouldn't give you enough time. When the five minutes were over I would say, pass me the sheets of paper and I'll pay you a dollar per question. People did this, I would pay people four dollars for their task - on average, people would solve four problems. Other people I would tempt to cheat. I would pass the sheet of paper, when the five minutes are over I would say, please shred the piece of paper, put the little pieces in your pocket or in your backpack and tell me how many questions you got correctly. People now solved seven questions on average. Now it wasn't as if there was a few bad apples - a few people who cheated a lot. Instead, what we saw is a lot of people who cheat a little bit. Now in economic theory cheating is very a simple cost-benefit analysis.

You say, what's the probability of being caught, how much do I stand to gain from cheating and how much punishment would I get if I get caught. And you weigh these options out, you do the simple cost-benefit analysis and you decide whether it's worthwhile to commit the crime or not. So we try to test this. For some people, we varied how much money they could get away with - how much money they could steal. We paid them 10 cents per correct question, 50 cents, $1, $5, $10 per correct question. You would expect that as the amount of money on the table increases people would cheat more but in fact it wasn't the case. We got a lot of people cheating but still by a little bit. What about the probability of being caught? Some people shredded half the people paper so there was some evidence left, some people shredded the whole sheet of paper. Some people shredded everything, went out of the room and paid themselves in the ball of money that had over $100.

You would expect that as the probability of being caught goes down people would cheat more but again this was not the case. Again, a lot of people cheated by just a little bit and they were unsensitive to these economic incentives. So it's said if people are not sensitive to the economical rational theory explanations to these forces what could be going on? And we thought maybe what is happening is that there are two forces. At one hand we all want to look ourselves in the mirror and feel good about ourselves, so we don't want to cheat. On the other hand, we could cheat a little bit and still feel good about ourselves. So maybe what is happening is that there's a level of cheating we can't go over but we can still benefit from cheating at a low degree as long as it doesn't change our impressions about ourselves. We call this like a personal fudge factor. Now how would you test a personal fudge factor? Initially we said, what can we do to shrink the fudge factor?

So we got people to the lab and we said, we have two tasks for you today. First we asked half the people to recall either 10 books they read in high school or to recall the 10 Commandments and then we tempted them with cheating. Turns out the people who try to recall the 10 Commandments, given the opportunity to cheat, did not cheat at all. It wasn't that the more religious people, the people who remembered the Commandments, cheated less and the religious people, the people who couldn't remember almost any Commandments, cheated more - the moment people thought about trying to recall the 10 Commandments they stop cheating. Now 10 Commandments is something that is hard to bring into the education system so we said, why don't we get people to sign the honor code. So we got people to sign, I understand that these short survey falls under the MIT honor code, then they shredded it, no cheating whatsoever. And this is particularly interesting because MIT doesn't have an honor code.

(LAUGHTER)

RAZ: That's amazing. So when you introduce, like, an element of moral accountability like signing an honor code the students are less likely to cheat?

ARIELY: Yes. So it's basically all about what are you thinking about. Now I don't think this affect last very long. Right, it's not as if we can get people to recite the 10 Commandments once a week and they'll be honest for the whole week. But at least it tells something about the moment it reminds it. And saying that at the moment you can get people to think more deeply about honesty, to be more attentive, it does change your own understanding of what's right and wrong and your ability to rationalize in that moment. It's almost like an anti-rationalization mechanism to think about morality in this way.

RAZ: Have you ever, like, taken some printer paper home, like, just paper home to use in your home printer?

ARIELY: Oh yeah. Of course but I can justify that very easily.

RAZ: But that's not really cheating or being deceitful is it?

ARIELY: Actually I'm being helpful. I get to work more at home.

RAZ: Exactly.

ARIELY: What do you mean?

RAZ: But why is that seen as bad behavior?

ARIELY: Well I think the thing is that we have this capacity to rationalize all kinds of behaviors like taking paper home. But if it was money and we said, would I take money from the office to buy paper for my home printer I think you would think about it very differently.

RAZ: Because that's wrong.

ARIELY: That stealing.

RAZ: That stealing.

ARIELY: Yeah. But if the same thing is framed as something else like a pencil or a piece of paper or something like that all of a sudden we can think about it very differently. And maybe the word think is a bit strange because we basically don't think about it and by not thinking about it very clearly we're basically allowing ourselves to misbehave and still not think of ourselves as bad people.

RAZ: Do you assume that everybody you meet or encounter is a cheater in some ways?

ARIELY: Well I think of this as human I don't think it's a cheater. But in the same way that we have a hard time, you know, not overeating and saving money and all of those things but dishonesty is also different in a sense that we teach our kids to lie. You know, nobody tell their kids that when they grow up they should always say, honey you look terrible in that dress - right? In the social realm we do understand that people have some benefit from dishonesty and it's an important lubricant for society. But then people moved to the business world and while I want my wife to care about my feelings I don't want my accountant to care about my feelings. Think about something else what happens if you're at a company and some of your friends are misbehaving and now you have a conflict between your friendship, your loyalty to them, your loyal to the company and honesty.

RAZ: Which brings us back to 2001 to...

(SOUNDBITE OF NEWS BROADCAST)

UNIDENTIFIED WOMAN: One of the most stunning collapses in U.S. corporate history.

RAZ: And to Dan's friend John Perry Barlow.

ARIELY: He basically said he didn't see anything going bad.

RAZ: Now Dan started all his research with one question. And the question was are there just a few really bad apples or their lots and lots of kind of bad apples. But what if there isn't a huge difference between the two. Like, what if the worst of the worst start out like you and me? So for the past two years Dan's been trying to figure out the answer to that question. He's been interviewing some of these really big cheaters.

ARIELY: And what they did at the end is just incomprehensible and you say, I can't possibly see myself behaving this way.

RAZ: Yeah.

ARIELY: But then you look at the details and you look at step one and step one was often innocent and not selfish at all. It was to help other people. It is really this slippery slope of taking one step often for something that at the moment people think is for a good cause.

RAZ: I mean, I think that most of us have a limit, right? We have some kind of limit in our minds and I mean that slippery slope cannot apply to everyone.

ARIELY: So of course I don't know if it applies to everybody. So the first thing to recognize is I think the ability to rationalize some dishonesty is within us all. On top of that now there's a question of which of us would be able to just cheat a little bit from time to time and which ones of us would be able to go into a slippery slope. Let's assume that you admit to that from time to time you're less than perfectly honest but you've never a been onto the slippery slope and, you know, you go and you get a job - let's say a banker at Goldman Sachs.

And there are things about the local culture and are things about how people treat each other and things about how they talk about their clients and their ideology and so on. You should ask yourself whether you think that you would be a immune from a slippery slope under those conditions. And, you know, I don't have evidence for that but I think it would be all hard to imagine that all of us who are good right now would not have a chance of being bad for the wrong conditions.

RAZ: Dan Ariely is a behavioral economist and psychologist at Duke University. You can watch all four of his talks at ted.com. When we come back - the human lie detector. Stay with us. I'm Guy Raz and you're listening to the TED Radio Hour from NPR. Transcript provided by NPR, Copyright NPR.